Infinity Designs, an interior design company, has experienced a drop in business
ID: 2460793 • Letter: I
Question
Infinity Designs, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling projects. To stimulate business, the company is considering exhibiting at the Home and Garden Expo. The exhibit will cost the company $12,000 for space. At the show, Infinity Designs will present a slide show on a PC, pass out brochures that are printed previously, (the company printed more than needed), and show its portfolio of previous jobs.
The company estimates that revenue will increase by $36,000 over the next year as a result of the exhibit. For the previous year, profit was as follows:Explanation / Answer
Current Expected Increase/(Decrease) Revenue 201000 237000 36000 Less Expense Design supplies (variable cost) 15000/201000*237000 15000 17687 2687 Salary of Samantha Spade (owner) 80000 80000 0 Salary of Kim Bridesdale (full time employee) 55000 55000 0 Rent 18000 18000 0 Utilities 6000 6000 0 Depreciation of office equipment 3600 3600 0 Printing of advertising materials 700 700 0 Advertising in Middleton Journal 2500 2500 0 Travel expenses other than depreciation of autos (variable cost) 3000/201000*237000 3000 3537 537 Depreciation of company cars 9000 9000 0 Exhibit Space rent 0 12000 12000 Total Expense 192800 208024 15224 Net Income 8200 28976 20776